In 2017 the NZD/USD was one of the most volatile currency pairs. The NZD value repeatedly varied in a large range from 0.68 to 0.7512 USD. Then, before December 2018, we saw a rapid decline in the New Zealand currency and a clear downward trend due to the trade conflict between the US and China, as well as the economic downturn in New Zealand. The situation was exacerbated by similar problems in Australia and China. Today, we are seeing the rates in a flat trend, with a narrow range of 0.6707-0.6938 USD, which is not typical for this currency pair. Both currencies are under pressure today, but the NZD can certainly be considered more vulnerable than the USD.
Nevertheless, today the USD does not find enough incentives for strengthening. According to recent reports, the US economy is slowing and unemployment is growing at a faster pace than expected on the market, so the Fed is forced to take a wait-and-see approach to monetary policy.
The New Zealand dollar received support with the release of the PMI index, which rose by 0.6 points. In addition, the inflation rate in February amounted to 1.7%, the highest growth rate for the last 10 months. This is certainly a positive signal for the New Zealand economy. However, most analysts agree that the NZD is the most vulnerable currency, along with the AUD, because the economies of these countries are linked and depend on the situation in China, which is gradually worsening. Recent economic reports from China show a decline in production output to the lowest level in the last 17 years. Despite the measures to stimulate the economy by the government of China, according to forecasts, the growth rate of China's economy and production volumes will continue decreasing amid decline in exports and a decrease in demand for products from China.
In this situation, the most effective would be the deals to sell, in the conduct of medium and long-term trade, given the disappointing forecasts regarding the NZD as a commodity currency. The Stochastic oscillator signals that the rates are in the overbought zone, which also speaks in favor of short deals. Entry points on the market, can also be noted at the levels 0.6707 and 0.6938. Achieving the first one seems the most likely scenario at the moment.
